Episode Transcript
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(00:06):
Tonight, we're talking about something themarket haven't experienced in three hundred and seventy
seven trading days, and why youmight want to take note. You're listening
to Simply Money, presented by allWorth Financial I Memi Wagner along with Steve
Ruby. If you're a regular listenerto the show, you know we talk
about the stock market not in termsof points, but percentages. And there's
(00:27):
a really good reason for that.Yeah, percentages just make so much more
sense because when you read a headlinethat says the Dow Jones or the Nasdaq
or the S and P five hundredor whatever, the headline says plummeted or
plunged x amount of points. Pointscan sound headcary. Yeah, it can
sound like a lot. But youmight get jittery, you might get nervous.
You might even react emotionally to thatand make a bad decision with your
(00:49):
four to one K. But didyou look at the percentage shop because that's
the key. Yeah, it isthe key. And I also hate the
verbs that these headline writers use.I mean, they're trying to get clicks,
they're trying to get your attention,but it does mean you feel like
when they use the word plunge orplugged, like you know, the bottom's
falling out here. Well, no, no, I mean understanding that when
you invest money in the stock market, the price of admissions always going to
(01:11):
be some volatility. And when youhear X number of points, oh that
sounds scary, but I think thepercentage provides context. How much of a
drop are we talking here? Pointsthey don't really mean anything. Percentage,
well it does, yeah, percentagecan certainly mean something. And speaking of
the last time the S and Pfive hundred had to sell off of more
(01:32):
than two percent was just over ayear ago, three hundred and seventy seven
trading days specifically, and that's thelongest stretch since the financial crisis, the
Great Recession, so more than fifteenyears ago. And this is according to
data, you know, put togetherby facts that compiled by CNBC. The
index, the same index, theS and P five hundred hasn't experienced a
(01:53):
gain of at least two point onefive percent in the last three hundred and
seventy seven days, either, whichmeans, believe it or not, we
are in a period of calm.You know what makes me really nervous about
calm is there's this kind of falsesense of like what could go wrong,
right, not a lot of reallybad days, not a lot of really
(02:13):
great days either, you know.I think we had a stat I don't
know, a few weeks ago,a month or so ago about the fact
that if you really look at thegains in your portfolio so far this year,
there's like eight or nine days thatcontributed. In none of those days
we're really higher than two percent.But if you missed those days, right,
those days combined are what got youat least a pretty good day or
(02:35):
a pretty good year so far,you know. So I think understanding these
percentages is incredibly important, but alsothe perspective that comes from a relatively rare
long stretch of calm, calm waters. We've also recently talked about the fact
that this is when you build yourboat, your financial boat, right.
That's incredibly important because you do notwant to be building a boat in times
(02:58):
when markets are way down, andI would also say way up. Fear
and greed equally can play terrible rolesin your financial plan. So I think
there's some advantages to being in thisplace right, some things that you can
be doing right now, and alsomaybe we would say some perspective we think
that you should have. Yeah,that's a great point about building your boat.
We had an entire segment on thata month or so ago where we
(03:19):
talked about building your financial strategy duringperiods of calm, because I'll have people,
you know, I had an eightyfive year old gentleman in my office
the other week and he was like, Hey, you know, the markets
are doing great. I think Iwanted to deploy some of my cash.
I want to put it to worknow that things are at and a tidy
puts me all in on the stockmarket. Right. Well, why didn't
we do this, you know,five years ago when this was this could
(03:40):
have been part of your long termplan rather than something based on a little
bit of greed, I would argue. But we also had a segment recently
about the VIX. Remember the VolunteerVolatility Index is the gauge that shows Wall
Street's fear and anything above twenty isis not calm waters anything below twenty signifies
(04:02):
calm. And that's what we've beenfor quite some time. And if you
look closely under the hood, Ithink the reason why we've sort of had
this period of calm is that,you know, we came out of this
period of incredibly high inflation and we'restarting to see some relief. So we're
seeing some relief from inflation. There'sa little more clarity on maybe what the
(04:24):
Federal Reserve might do next. Wecame out of this time where the Federal
Reserve was pretty consistently hiking interest rates, which was sending some sort of shock
waves through the economy, right throughthe system, and now the conversation has
sort of pivoted from increasing those interestrates to maybe later this year decreasing those
rates. In all of these thingssort of bode well for the economy,
(04:48):
for the stock market, for theaverage investor. And so I think it's
like everyone is taking a collective deepbreath, a sigh of real yes,
almost like you know, when youon financial websites right now, every headline
isn't declaring Armageddon's going to happen tomorrow, doomsday prophecies, major recessions like we've
(05:09):
seen predicted over the last year twoyears. I think collectively we feel like,
okay, there is a bit ofa sense of calm here. Yeah.
Well, I mean, not tothrow a wrench in all of it,
but that doesn't mean it's going tostick around, because the market it
will not stick around. Yeah.So if we look at twenty seventeen,
the S and P five hundred,it had just eight daily moves of more
than one percent, which is calm. That is very calm. That the
(05:32):
vics fell to historic lows. Again, that's the Wall Street Fear Index of
around just below nine. Today itsits at thirteen, which is still calm.
Remember below twenty, it signifies thosecalm waters. The following year,
twenty eighteen, however, volatility cameback to the market and the VIC surge
to above fifty before easing. Weall know the term the calm before the
storm, right. I mean,I'm not saying that that's happening here,
(05:56):
but you know, volatility is aninevitable part of a really healthy financial in
stock market cycle. You're listening tosimply when you presented by all Worth Financial,
I mean you wagner long with SteveRuby as we talk about something we
haven't seen in a really long time, and that's a lot of volatility in
the market. No major down swingsbelow two percent, no major upswings above
(06:17):
two point foot one five percent,and we would say, okay, This
is the time where if you donot have a financial plan, you build
the boat. You get your planinto place, You figure out what your
risk tolerance is. You rebalance ifyou haven't rebalanced in a long time.
You get to know your four ohone K. You make sure you're maxing
out the company match. You makesure that those investments that are in there
(06:39):
are really well suited for you longterm. I think there's some work to
be done in these periods of calm. Yeah, And obviously while we're not
making predictions, there are those thatare going to use periods of time to
periods of calm to make predictions.So, you know, they think the
media thinks, for example, thatthey know how things are going to shake
(07:00):
out. And remember, if itbleeds, it reads, so we're going
to you know, we've seen onerecently that said get ready for stocks to
hit a wall this summer, forexample. Sounds kind of scary. Yeah,
stocks are going to hit a wall. Everything's going to drop, the
bottom is going to fall out.We're certainly seeing things like that. There's
a guy with with JP Morgan WallStreets. We would call him loll Street
(07:20):
Wall Streets. Last bear standing bePerma Bear, is somebody that thinks the
markets are always going to close downat the end of the year. They're
always going to close down, andmost of the time they're wrong. Thankfully,
he's saying that that the SMP isgoing to close down forty two hundred
points at the end of the year. What's the job description for the job
(07:40):
that is you just make a bunchof predictions and nobody holds you accountable if
they're not right. Economic analyst,like, what is that? Sign me
up for that? Because the problemis there is you know nothing, no,
nothing happens to them right if they'rewrong. In fact, very few
people except for maybe us, areout there kind of holding feet to the
fire saying, hey, remember whenyou said this and this was wrong.
(08:03):
My concern though, is people whodon't know better, exposed to those headlines,
exposed to those information, that informationfeeling like triggered that they need to
do something. I need to sellor I need to go all in because
of these predictions. You know,you've got someone talking about, you know,
the S and P five hundred downat the end of the year.
On the flip side, another headlinewhich reads that you know it's going to
(08:24):
hit fifty seven hundred in a postelection rally. Really, who has that
crystal ball? Where is it andwhere is the fallout for them when these
predictions don't come true. That doesn'thappen. There is none. It's just
clicks lead to marketing revenue, andmarketing revenue is a good thing. So
they're allowed to say what they wantin order to be loud on one side
(08:45):
of the belief spectrum and the otherone saying that the bottom is going to
fall out, and that guy's nameis Marko Klanovitch with JP Morgan, SMP
is going to end up forty twohundred, and then we have people at
Wells Fargo saying S ANDP is goingto be fifty seven hundred post election.
Speaking of post election, we doencourage you to not make emotional decisions based
(09:07):
on political beliefs for what happens inNovember with the elections. I am getting
investors that I work with asking thesequestions right now. I'm getting text messages
from friends who are saying, weknow we're going into a recession as soon
as soon as we have a newpresident. Regardless if you're that president is
I know you know many of youcan be incredibly, incredibly passionate about your
(09:31):
politics, and I think you shouldbe. You've got the right to vote,
you should exercise that right. Butthe problem is when you're also so
emotional about your money and then youthink you need to do something with that
passion that you have for politics withyour money. And we've got some great
perspective on this. We had aninterview not long ago. It's on our
Best of Simply Money podcasts from Maythirty. First, if you have any
(09:54):
any anxiety around this election and whatyou should do with your investments, I
encourage you to download that and shareit with your friends. We have someone
that we kind of refer to asthe Secretary of explaining stuff that has some
of the best perspective I have everheard in regard to politics. Who's an
oval office, who's running Congress,and what that means for your investment.
(10:15):
So, if you have, atany point this year or in past election
cycles, thought I need to dosomething as the result of what I think
is coming, please hit pause onthose feelings and those thoughts. Listen to
this podcast, give it some considerationbefore you do anything. And if someone
around you is bringing that up,please please share again. That podcast best
(10:35):
of simply Money for Me thirty first, or some just really great perspective on
it. Yeah. I mean,a quick summary of what's talked about in
that segment is that it doesn't matterwho ends up in the White House because
companies are still going to find waysto make money. That's the bottom line.
We live in a capitalistic society,and betting against the markets is betting
against corporate reading capitalism. So nomatter who's in office, we're still typically
(10:58):
seeing growth, not only in electionyears but in the four years following.
And I think a lot of peoplealso try to make predictions about what sectors
might do well or do poorly basedon a particular politician and what they believe
in, and we've seen that goincredibly awry many many times. I mean,
you just there's so many factors outsideof that Oval office, and I
(11:18):
realized, we consider this person themost powerful person in our country in the
world. But thankfully, the Americaneconomy is even bigger and more powerful than
that. And when you get reallycaught up in the emotions behind politics,
I want you to remember one thingthat is the S and P. Five
hundred, That is, American companiesare built on the backs of corporate greed.
(11:39):
Corporations clawing at ways to make moreand more money, and that's kind
of the American way. There's notgoing to be any politician that's going to
make them stop doing that. AndI think that's some great perspective. So
we are in a period of relativecalm. We don't know right when we
get the election and after if therewill be some volatility. There likely will
(12:03):
be, but I think you've gotto have that perspective. Here's the all
Worth advice. Don't go chasing investmentreturn just because the markets are calm right
now. Any short term decision basedon greed or even fear could really hurt
you long term. Coming up next, did you change your asset allocation this
year? Okay, we're looking atinvestors who have saved a lot of money
(12:24):
and what we can learn from them. You're listening to Simply Money, presented
by all Worth Financial here in fiftyfive KRC the TALX station. If you
can't listen to our show every night, we do have a daily podcast for
you, Search Simply Money. It'sright there on the iHeart app or wherever
you get your podcasts. Sorry,so many different kinds of investments out there.
(12:46):
Coming up in a few minutes,we're going to talk about something called
a buffer ETF. Is it agood strategy? Is it a good investment
for you? We'll tea it alittle bit about what it is in why
it might make sense. I thinkmany times you can feel like I'm behind
the eight ball or what did thisperson do that I didn't do? And
so tonight we're taking kind of adeeper dive into those who have saved well.
(13:11):
Right, there's some recent research outthere about people who have a million
dollars or more and how they're invested, and I would actually say it's interesting
information. I don't agree with it. Yeah, that's a good point.
I mean, we can talk abouthow people are investing at different asset levels,
but at the end of the day, if you're working with a fiduciary
financial planner, it's going to openthe door up to different investment strategies and
(13:33):
tax planning strategies. But let's takea look at some of these. Because
there was research done by cap GeminiInstitute that looked at high net worth investment
opportunities and how those with at leasta million dollars are typically investing, And
what they found is that at thestart of twenty twenty three, the folks
that had at least a million dollarsthat they had about thirty four percent of
(13:54):
their assets and cash or some kindof a cash equivalent. This would include
CDs, money, more market fundstwenty three percent, equities fifteen percent,
fixed income like bonds or maybe somekind of a fixed annuity fifteen percent,
in real estate thirteen percent, andalternative investments. And keep in mind,
now one of the reasons we weretalking about this as well is because it
can show trends. By January oftwenty twenty four, the cash position went
(14:18):
down by ten percent, Yes,by ten percent. We don't need to
get into the rest of the weedsabout all the other statistics there, but
people with more than a million dollarswent from wealth preservation during confusing times last
year with interest rate hikes and uncertaintyabout when interest rates were going to be
falling again, which is likely laterthis year at this point, to how
(14:43):
can I get my money working alittle bit harder? Yeah, and I
think you know, some perspective thereis. Yeah, we came out of
a period of some pretty insane volatilityall over the place in twenty twenty two,
So I think there was a lotof people who were kind of seeking
some kind of a prie from that. And then, yeah, we've talked
many times on the show about theone silver line of the Federal Reserve,
our nation central bank raising interest ratesis you are likely able to make more
(15:05):
money on the money that you havesitting in cash. I mean we haven't.
You know, it used to belike point zero zero zero zero zero
one percent that maybe your bank wouldgive you on the money that you had,
you know, sitting in those accounts. Well, we've seen that skyrocket
over the past couple of years too, even north of five percent. So
I understand the thinking behind I've amassedthis money, I saw it go all
(15:28):
over the place this year. I'mjust going to put it in somewhere that
feels really safe to me and makefive percent on it. My concern and
looking at these numbers year over yearand seeing that, Okay, if it
made sense for these people to puta little more money in cash, then
why the huge change in thinking yearover year? Right, Because we would
(15:50):
say the way to really amass wealth, to build money, is to have
a financial plan. You stick toit, regardless of what's going on in
the econ to me in the stockmarket, you kind of brave those things
understanding that you're going to go throughcycle. So I think looking at how
people are changing their minds zero overyear and investing differently and changing their mindset
(16:11):
from oh I need to preserve thismoney to grow this money. It's a
very individual thing. Do I needto grow my money or do I need
to preserve my money? Right,there's different strategies. And I also think
even for the same person, andI'm sure you would agree that changes over
the course of your lifetime. Formost of us, when we're younger in
our careers and we're working and we'rebringing home paychecks, it's all about growth.
And when you get closer to retirementand that transition, it becomes a
(16:33):
little more about preservation. But wejust went through a period of really high
inflation, and I think many ofus a wake up call was you still
have to have some growth in there. Yeah, it's an interesting thing to
even look at because at the endof the day, I don't care a
whole lot, but anyone else isdoing. Yeah about these numbers. Because
when I work with folks Just likeyou said, we build financial plants.
(16:56):
It doesn't matter if you have,you know, a few hundred thousand or
ten million dollars, because the financialplan writes the prescription for your money.
Yeah, And what that means isit will help us determine the level of
risk that you need to take tomeet your goals, that you can afford
to take based on your financial situation, and then just getting to know you
a little bit. It shines lighton risk tolerance and it's important to find
(17:18):
that sweet spot based on the longterm and then have review meetings periodically,
because you're right, things do changeover time. When you're younger and you're
in the accumulation phase of retirement planning, it makes more sense to be higher
risk, higher reward, but makingsure that you keep some of that money
on the sidelines for an emergency fundor a rainy day fund, so you
know, with looking at data thatshows that millionaires deployed more of their cash
to longer term investments, I don'tcare. I think that the folks I'm
(17:44):
working with should have that long termstrategy that focuses on their own financial situation,
needs and goals. What I docare about and what I do think
there is a sort of larger takeawayfor everyone else that doesn't have millions of
dollars stocked away. Is as someonewho works with higher now where people was
kind of making this point that thosepeople seek specialized advice to leverage tax rules
(18:06):
effectively. Why why is it justthem? You know? I mean this
is something everyone should be taking advantageof. And for those of you who
have kind of been doing it yourselffor years, and you've done a great
job at you know, accumulating moneyand having a large amount in that flooring
k or iras or whatever it iswhere you have your money, when you
get to that transition into retirement,I think this is where tax efficiency becomes
(18:26):
incredibly important. You've amassed this money, you want to keep as much of
it in your pocket as possible withouthaving to pay so much of it to
Uncle Sam. It's not just peoplewho have millions of dollars who should be
looking into those strategies. It's everyone. And if that feels above your head,
it doesn't have to be. Becauseyou find a fiduciary financial advisor that's
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helped many many other people think throughthese strategies, and it goes into do
roth conversions make sense. And ifI have money saved in different sort of
buckets, investments with different sort oftax treatments, which makes the most sense
to pull from and in what situations? Right, All of those things are
a big part of this, whetheryou have ten thousand dollars in a bank
(19:07):
or ten million dollars in the bank. Yeah. The same article, in
the same research by Captain and Ialso talks about what people north of ten
million dollars do, and it's taxplanning. Yeah, come on, you
know, folks that work with Frouduciary, you don't need ten million dollars.
Yeah, you don't need ten milliondollars to explore tax planning strategies like you're
talking about qualified charitable distributions, rothconversions, so on and so forth.
(19:29):
Here's the all Worth advice. Yourasset allocation should be tied to when you
need that money long term, howmuch risk you are willing to take to
get there, not to what anyoneelse is doing. Coming up next,
we're going to stretch our muscles withour financial fitness guru and break down why
cash might not actually be king.You're listening to simply money presented by all
Worth Financial Here on fifty five KRC, the talk station you're listening to Simply
(19:55):
Money, presented by all Worth Financialand Memi Wagner along with See Ruby.
Are there particular days in your lifethat you reflect back on and you think,
man, I learned something big thatday, or maybe it just takes
a little time and you realize therewas a major lesson that came out of
something. All Riddick, our goodfriend from Game Time Budgeting, has just
that perspective from Father's Day this year, I love because you can turn the
(20:18):
everyday situations into a takeaway that wecan all remember when it comes to our
money. What's the latest from theRiddick cancle. So this year, my
dad spent an entire week with meat my home. So obviously we did
a lot of different things. Youknow, we played card games, We
went to the movies, took themto a to see a live band performed.
(20:40):
We even went to the comedy club. But there was one day in
particular where we had gone to themovies and then we stopped at a restaurant
for lunch. So my dad saidhe was like, Hey, this time
I want to treat you, AndI was like, you know what,
that's what you want to do.Let's do it. So I ordered the
food and then when he had thecashier his money, the person said,
(21:03):
we don't accept cash. You shouldhave seen the look on my dad's face,
because I can pretty much guarantee youthat was the first time in his
life that he had ever heard someonesay that. So of course I was
like, don't worry about it,pop, I got it. So when
we think about that term cash beingking, you know, of course we
(21:26):
tend to think about the superiority ofcash over other forms of payment, but
in the high take wheld we livein today, maybe cash is not king.
As my dad learned, that's amazing. I'm a season ticket holder to
King's Island. I have a nineyear old daughter, and you know,
if you live in Cincinnati or nearbyas far as King's Island is concerned,
and they don't accept cash either.Yeah, So if you have cash,
(21:49):
you put it into a machine andyou get a card. That your son
was just telling me. I saidto Kings Island with some friends and I
gave him some money and he waslike, and I was like, can
you use cash? Because I'm certainlynot going to give him my credit card
machines you put your cash into andit kicks out a card that you use
like a credit card. So Imean, to your point al in places
now, cash isn't necessarily an option. That is so true, and it's
(22:15):
becoming more and we actually less andless of an option these days. But
it was so intriguing because when youspend an entire week with your parent,
you do learn a few lessons,you though. So one of the things
that I learned keep in mind mydad he'll be eighty in a couple of
months, right, So one daywhen we had left another restaurant, he
(22:36):
was like, I'm tired. SoI was like, there's a bench right
there, why don't we sit down? So you have to picture it.
We're sitting on a bench, there'sa nice breeze blowing through, and the
sun is not out, so itwas very comfortable. We sat on this
bench for over an hour aiming,I know, and as I was watching
(22:56):
the world through my dad's eyes,just getting excited just by looking at the
cars driving through the little shopping plazaand watching people live their daily lives.
So one of the things that reallyhit me was that time is more valuable
than money. So of course whenyou look at it, you know,
we plan appropriately for our financial futures, right, and we when we do
(23:21):
that, we shouldn't run out ofmoney in retirement. But however all of
us will eventually run out of time. And all I'm wondering what your perspective
is for people who save and saveand save right for that day when they
retire and then something happens, right, and you've been focusing your entire life
(23:41):
on saving so that you can siton that bench and enjoy life, and
then maybe it doesn't come like whatis your comment on the balance of saving
but also living your life at thesame time. So it's kind of like
this amy. So for most people, you know, when you're young and
you start thinking about retirement and you'rein your high revenue generating years of your
(24:03):
life, financial planning and of coursethis is just my opinion. It is
a purely selfish act. But Isay that in a good way because it's
selfishness for a very good purpose.Because who wants to retire what they and
not have money? Right, Sowhen we think about just balancing planning for
retirement versus the inevitability of running outof time, I think it's very important
(24:27):
to make sure that you spend timewith people you love and people who love
you in return, because that timeis very well, actually, it's really
priceless when you look at it.So for myself, just by being a
hangout with my dad and consider thefact that you know, last year this
time he had just had a stroke. That time to me was precious because
(24:51):
I think we kind of like gotto see each other in a different light.
And I also learned a couple ofthings that I get from my dad
just said, my normal day today behaviors as a way, I'm just
observing him. That's really beautiful actuallythinking about looking at this through the lens
of planning for making sure that youhave time in retirement and making sure that
(25:14):
you're making the most of that time, because some people they struggle with the
idea of making that transition. Whatam I going to do? I'm gonna
be bored. Finding ways to makesure that you fill your time with things
that you value is a great wayto spend retirement. Exactly outside of that,
what other revelations have you maybe hadabout money that perhaps caught you by
surprise during this week of spending timewith your dad, So it actually gave
(25:37):
me a new ghosteve. So keepin mind, my dad has been retired
for almost thirty freaking years. That'sa long time, I know, right.
So I noticed that one of thethings he kept doing, like every
day he was saying, son,what day is it? He was what
time is it? And it reallyhit me that in his world, because
(26:02):
he does not have to report toa job, he does not care what
it is, and he also doesn'tcare about time. And I was like,
man, this is amazing. Sonow I have a new goal to
eventually forget the day of the weekand not care what time of the day
it is, because to me,that is when you are truly enjoying life
with those two things that are extremelyimportant to the average person no longer makes
(26:27):
sense to you. You know,al, I can't imagine. I can't
imagine a time when time doesn't makesense. But I love that as a
goal. And I think about somany people who use the excuse of I'm
just going to work forever, soI'm not going to save anything, and
they miss out on the opportunity tonot have to care what day of the
(26:51):
week it is and to not careabout time. Because they're going to have
to report to that boss until theday that they can anymore. Exactly and
Amy, obviously you know me quitewell by now. I'm a big,
big believer in saving money because it'sjust a smart thing to do financially.
However, I'm also a big believerin creating experiences that will last a lifetime,
(27:17):
because to me, what's the pointof living your life if you're always
so concerned about putting away every penny. You know, I'm all about the
dollars, but not so much thepennies, And then you miss out and
then eventually you get to a pointof your life where you say, you
know what, I wish I hadspent more time doing AX or I spent
I wish I had spent more timewith a certain person in your life.
(27:38):
That just allows you to experience lifeat a better level. Well, that's
what I've That's how I described financialplanning. It's not just protecting your net
worth but growing it year every yearso that you can maintain a standard of
living that you've grown. Used tomake sure that you continue to have the
experiences that you desire to and throughretirement, so making sure that you have
(28:02):
that plan in place that allows youto continue living that lifestyle that you've grown
used to. Is one of thebig motivators for actually sitting down and building
a financial plan. Definitely, sir. And the more people take advantage of
like the services that people like youoffer, I think it only will help
you reduce stress with your personal finances, but better prepare you for your future
(28:23):
as well. Time is money,Money is time, right, and I
think that your perspective on just aday with your dad or week with your
dad is something that we can allapply to our own lives. Al As
always, we learned so much fromyou, and it always amazes me how
you can take one situation one dayand make it such a teachable moment for
the rest of us. We appreciatethat about you. You're listening to Simply
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Money presented by all Worth Financial herein fifty five KRC the talk station.
You're listening to Simply Money presented byall Worth Financial. I mean you wagnarlog
with Steve Rube. If you've gota financial question you want us to answer,
we can help you. There's ared button you can click them while
you're listening to the show. Youneed to go to the iHeart app record
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that question. It's coming straight tous. We can help you figure it
out and straight ahead. Maybe goingnowhere for your next vacation might be the
best decision, and maybe why Cincinnatiis actually a really great place to do
that. I've mentioned this man onthis show many many times, and several
years ago, every time we hadany sort of all Worth workshop wear webinar
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seminar, he was there in thefront row. And the reason why is
because he really understood that he neededto invest his money and he wanted to
grow his money. He also wasparalyzed by the fact that there is a
downside to investing. I mean,he just he just kept coming in thinking
that in the last month since heheard from me that he you know,
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since he was in the front row, we were going to come up with
a new option for him. Youknow. It was like yeah, and
it was like that there it doesn'texist. To invest. There is going
to be risk. But for thoseof you who are super risk averse,
there are more complex strategies out therethat can help you maybe minimize the downside.
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So if the market is down twentyfive percent, right, twenty percent,
it's terrible and everyone is bleeding orI think back to two thousand and
seven, two thousand and eight whenmy four to one k was down forty
percent. There are strategies out therethat can help you maybe not participate in
the entire downside. Yeah, sowe're going to talk about buffered ETFs today.
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Now you may have hear c.Yeah, you might have heard about
that. An ETF. First ofall, it's an exchange traded fund,
which is a basket of securities thatcasts a large net and it trades on
the stock exchange. Just like anindividual security. ETF share prices they fluctuate
throughout the day, as opposed toa mutual fund, which is priced in
at the end of the trading day. Now, a buffer ETF has more
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of a defined outcome that limits losseswhile giving up some of your potential gains.
So it's a little bit like anequity indexed atnuity without needing to take
on a contract, and it's doneusing options strategies. Options are more complex
investment vehicles. You sell a call, you sell a put, You use
the premiums to buy a call andbuy a put, and it essentially structures
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at ETF so that your gains arecapped, but so are your losses,
and that can be very appealing tosome people because it doesn't have the same
restrictions and you're not locked in thesame way as you are with an annuity.
Not the same commissions that to thatperson who sold the annuity to you,
right, not the same probably surrendercharges, no surrender charge, yeah
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right. It gives you a lotmore flexibility. And keep in mind too,
this is not the most tax friendlystrategy, So you don't want to
have this in your taxable accounts becausethat's going to be a huge headache in
a mess. But in your taxdeferred retirement accounts, this can make some
sense. And you know, Ithink you've got to know yourself. This
is a sort of look yourself inthe mirror proposition. And if you really
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really struggle when markets are down andyou feel like I need to do something,
I need to go into cash,I need to move some money out
of this, a strategy like thiscan be very helpful. And I think
that piece of mind factor of sleepingbetter at night. Now, this is
a long term proposition, right,You're still going to see fluctuations over the
course, you know, six monthsout, but it's like for an entire
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year. Right, If over thecourse of the next year, ultimately the
markets are down twenty percent and yourbuffer ETF only goes down fifteen percent,
then you're or ten percent. Right, then you're sheltered from a good portion
of that. It maybe that allowsyou to sleep better at night. On
the flip side, man, ifthere's a heck of the year in the
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stock market index and every time you'reat parties in cookouts, everyone's talking about
how great their four one K isdoing, your four O one K will
still be doing really well, butyou will not have the entire upside that
everyone else would have. Yeah,that's one of the downsides outside of the
loss of tax efficiency because you're constantlywell, there are these are very actively
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managed because there's options. That's theright to buy, the right to sell
stuff that you don't need to concernyourself, implicated spreadsheets that are constantly looking
at different options of buying and selling. Yeah. Yeah, So that that's
what creates a hedge against market losses, is the options, and you do
you limit your earnings on your investmentby sacrificing that in an effect to minimize
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your losses. Now, is thissomething we would say, hey, d
I wires, you can do thison your own. No, technically you
can. I mean you can,but if you can, you should take
my job because you have a heckof an analytical mind and you should completely
be a financial analyst, right.I mean, this is a very complex
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strategy. It doesn't mean that youdon't have access to it, because more
and more people do. They accessthose, usually through their fiduciary investment advisors
who really understand the intricacies of theseand can say, hey, this might
actually be a really great strategy foryou. Maybe there's another option that helps
to limit the downside that would bebetter. But I think the most important
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thing to know is that if youare someone who really struggles with huge market
fluctuations this there are options out thereand this is just one of them.
And I would say most financial plannersthat deploy the strategy with folks they work
with would probably use it for asmall proportion of clients overall net worth,
not your entire net worth, becauseagain, you're limiting the upside potential and
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that can create problem. Yes,this is just that sleep factor of maybe
all of your portfolio isn't so exposedto that volatility. Here's the all Worth
Advice speak with a fiduciary financial proto determine whether an investment like a buffered
ETF even makes sense for your portfolioand your financial goals. Coming up next,
why people find staycations really attractive?Right now, especially right here,
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you're listening to Simply Money presented byall Worth Financial. Here on fifty five
KRC, the talk station. You'relistening to Simply Money presented by all Worth
Financial. I mean, you Wagneralong with Steve Ruby, I would say,
tis the season. You know,kids are out of school, Many
people's workplaces kind of slow down alittle bit. A lot of people go
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places in the summer, head tothe beach. But we would say,
hey, maybe this is the yearto start thinking about a staycation. One
of the reasons why is because youhappen to be living in one of the
best places in the country to dojust that. Yeah. How about that,
Cincinnaddi ranked as the top five citiesin the US to enjoy a staycation?
Look at us? Yeah, thisis according from a new ranking put
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out by a wallet hub. Theycompared to actually one hundred and eighty cities
across three key dimensions to find thebest places for a fun, fun experience
that is also wallet friendly. Sothey looked at things like day trip activity
close to home that doesn't require overnightaccommodations. For example, they looked at
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swimming pools and how easy it isto bike around cities, how much it
cost to go to a movie,how access how accessible bowling is, nightlife,
festivals, restaurants. When you thinkabout it, and I think,
we take this for granted. Igrew up here. I knew you didn't,
but I remember a time when therereally wasn't a lot to do downtown
and you certainly didn't go down toover the Rhine. I mean, this
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city has experienced a pretty major renaissanceover the past ten fifteen years, making
it a destination. And I saythat we take it for granted because oftentimes
when someone comes in from out oftown, they're like, huh, this
is really raat. Yeah, Iwent to a Reds game and that I
had the most amazing meal, oryou know, I walked along the river
and then I did this, andit's a great city. So if this
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is a year when maybe you're strugglingfinancially or you just want to save a
little more, you can still havea lot of fun. And it's interesting
because a friend of mine on Facebookrecently made the point that her husband took
one of the kids to do abig trip, and so she was here
in Cincinnati with another child and theyspent three days. And I'm looking at
this and I'm like, what youcan do all those things in Cincinnati?
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Like it was kind of eye opening. They had a blast. Yeah,
they did so many different things thatI don't even take advantage of here.
Well you should, I know,I know that now. It turns out
that I come I come from numberfifty seven on the rank in Cleveland.
That's pretty good out of one hundredand eighty. I mean, but since
nat not three. Yeah, Cincinnatibeat out Vegas, Yeah, Tampa,
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Florida. It's the only Ohio cityin the top ten. So I mean,
there are certainly opportunities here to notbreak the bank by taking an expensive
vacation while getting to know the citythat you live in and having a great
time. You said it yourself,you know, And I have people visit
from out of town they say thisplace is pretty cool. It caught me
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off guard as to how much funsinc naty can be. There's an affordability
and an accessibility about it. Right. We have you know, major markets,
sports, we have you know,professional teams here. You know,
with the addition of FCC, that'sa ton of excitement that happens right downtown
and over the ride, like there'sso much going on. And then the
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restaurant scene, like we're kind ofspoiled around here. We have so many
restaurants that are affordable, you know, at least four and a half stars
out of five. You know,you go to a Chicago or New York,
like you're gonna pay a lot ofmoney for that. So this might
be the summer to stay around.Thanks for listening. We hope you're going
to tune in tomorrow. We're givingyou our take on a claim that index
funds are actually ruining the stock market. You've been listening to Simply Money,
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presented by all Worth Financial here infifty five KRC, the talk station